With the dawning of a new year, the medical imaging modality market takes another step forward. Some of the developments set to occur in 2023 have been a long time coming. Vendors, for instance, have long been innovating and refining medical imaging modalities to improve image quality, one of the fruits of this labour, photon counting CT, is coming of age and will continue to make clinical progress. Other changes are more rapid. Global economic headwinds accelerated rapidly in 2022, catalysing change at vendors and providers alike. Amidst the uncertainty that a new year brings, there are, however, some predictions Signify Research can be confident in making.
Asian Manufacturers will Strive to Capture the US Market
To succeed, vendors must head to where their greatest opportunity abounds. In many cases, for Asian manufacturers, this means making a success of the large and lucrative US market. For many of these Asian vendors the opportunities in their domestic markets are looking limited, in Japan, for example, government spending on healthcare has slowed, while in China, the rate of market growth has eased since its peaks over the past decade, with the country’s slow relaxation of its Covid policy not set to benefit modality vendors for some time yet.
With such challenges at home, vendors must increasingly focus abroad. There are different ways this focus could manifest, with, for example, Canon Medical establishing a new US subsidiary, Samsung developing a new Boston Imaging brand and United Imaging looking to increase its footprint in the region.
Which method is adopted will largely be dependent on individual vendors. Some smaller and midsized vendors may focus on distribution partnerships, ensuring that their products can be sold alongside complementary products from other brands while also benefiting from the distributors’ after sales and support networks. Other, larger Asian vendors such as United Imaging and Canon Medical need scale to be able to compete with the international leaders in medical imaging. Scale allows for greater reinvestment in research and development, as well as stronger negotiation capabilities when sourcing components and raw materials and reducing production overheads through the economies that scale offers. Such benefits will only be realised through a greater company presence in the US, enabling large vendors to tender for and secure larger, hospital and health system wide contracts.
Vendors will Increasingly Prioritise the Indian Market, Perhaps in Vain
China has long been among the key growth markets for medical imaging vendors. However, even before the Covid pandemic, the rate of growth had slowed considerably. Some point to the expansion of healthcare provision in rural China as an ongoing opportunity. This is true, but between protectionist procurement policies and the relatively moderate potential rural China offers compared to the cities given the preference for lower cost systems, growth prospects are still lower than the country has offered in the past.
As such, medical imaging vendors will have to increasingly focus on other emerging markets if they hope to enjoy similar growth prospects, and India is likely to be at the centre of these ambitions. Several vendors are increasingly making inroads into the country, with the likes of GE HealthCare’s partnership with Wipro and Fujifilm’s establishment of screening centres indicating the growing importance the country holds. It’s easy to understand why, as well as a growing population and in particular a rapidly expanding middle class. Politically, India is stable compared to several other opportunities and enjoys more cordial relationships with western countries than can be said for some markets. While there is a growing momentum for domestic manufacturing of medical products, partnerships such as the aforementioned GE – Wipro collaboration meet this requirement, ensuring it is not necessarily a barrier to large international vendors. Essentially, everything is in place for India to enjoy the same sort of significant growth as China has enjoyed over the past decade.
However, this has been the case for several years. What India lacks is the actual execution. Growth in China was so impressive, in part, because of the efficient implementation of healthcare policy. This efficiency is lacking in India, where the filtration through regional governments and local authorities slows the actual implementation of healthcare policy. India represents a compelling opportunity for international vendors, and they are wise to increasingly focus on it. But, simply considering it the ‘new China’ and treating it as such is a foolhardy way to approach the market. In 2023, vendors need to target India in a far more nuanced manner if they are going to realise its advantages.
Demonstration of Dedicated Clinical Solutionss will be a Key Driver of Purchases in 2023
In 2023 vendors will have to increasingly aid providers in meeting the challenges they are facing at present. In some instances, improvements in specifications and additional features will help achieve this, however, vendors will also need to show providers how their modalities will be able to address the clinical problems that providers are facing.
One example where this has already been effective is Siemens Healthineers, which, with its 2020 acquisition of Varian, has been successfully offering providers products tailored to oncology use cases. Given Siemens Healthineers’ success and the growing need for oncology care, the area is going to be an increasing focus for medical imaging vendors. This will likely manifest in, for example, greater molecular imaging capability.
There are also other growing clinical segments that medical imaging vendors will be likely to target. One growing area is liver care with the increasing prevalence of non-alcoholic fatty liver disease and other related conditions. There are growing rates of cardiac and vascular disease, while providers are also facing increases in neurological conditions such as Alzheimer’s. The tighter integration of modalities into workflows for such clinical conditions could encourage providers to make purchases, upgrading their modalities.
Another facet of this, as providers endeavour to diagnose diseases early is the increasing adoption of population cancer screening programmes. While such initiatives are likely to take a considerable time to develop, some smaller vendors such as 4D Medical are developing screening-specific modalities, while providers will be more considerate of screening as they make and execute their procurement plans.
Vendors Will Position Themselves as Experts in Outpatient Imaging
In the US and several other mature markets, outpatient imaging is among medical imaging’s most rapidly growing segments. The segment as a whole is growing, but concurrently, the segment is also becoming more consolidated as acute providers either partner with or, increasingly acquire independent outpatient imaging sites. As this trend continues, the scale of opportunity available to medical imaging vendors increases and as it does, so too will the interest they have in the segment.
One way vendors will look to capitalise is to establish themselves as experts in outpatient imaging. GE HealthCare is among those vendors looking to garner such a reputation. Along with medical device manufacturer Medtronic, GE already boast of dedicated teams with expertise in outpatient servicing, but, along with other vendors looking to take advantage of the outpatient space, will begin to offer dedicated solutions and support for that market in ambulatory care settings and in office-based labs. After all, in these settings, providers don’t need only the medical imaging equipment to conduct scans, but also more fundamental assistance and guidance with operational processes such as billing, reimbursement, and the establishment of the business. Imaging vendors will be keen to deliver these services, the likes of which can often offer higher-margin, and ‘stickier’ business than simple transactional sales.
Tackling this market, which is diffuse and decentralised will not be easy for medical imaging vendors more accustomed to selling into major acute settings, however, in 2023 vendors will make concerted efforts overcome these challenges, and capitalise on the growth opportunities the outpatient segment affords.
Disruptors won’t Disrupt
Recent years have seen a number of ambitious companies make bold plans to launch new, innovative and disruptive products onto an unsuspecting market. These companies have sought, variously, to free medical imaging hardware from the acute locations which have previously housed them, enable amateurs to diagnose conditions as well as professionals and bring medical imaging hardware to medically underserved areas of the world.
These ambitions are all well and good, and in some instances even noble, the reality is that so far results for the vendors trying to make these ambitions a reality have been disappointing. Although these vendors sought to disrupt certain markets they have, for the most part been struggling. Butterfly Network, arguably the most successful of this set of disrupters has made progress in the handheld ultrasound market, establishing itself firmly as one of the segment’s leading vendors, laying claim to a 23% share in 2022.
However, from a commercial standpoint the vendor hasn’t performed as strongly. With a share price of $2.33, less than a 10th of its peak in 2021. What’s more, while Q3 revenues increased YoY to almost $20m, so too has the net loss, which quadrupled from $13.6m to $54.7m. It’s a similar story at other vendors, Nanox, perhaps the vendor with the most grandiose claims, has, as of yet, failed to even produce a marketable product, while being dragged into legal disputes for allegedly making false claims, while shares in Hyperfine, a vendor producing portable MRI systems, fell from $9.9 in December 2021 to less than $0.8 a year later.
These disruptive vendors need 2023 to be a successful year. Providers dealing with current problems may help them gain some ground, but the uncertain economic climate, political unrest in and between key markets, and lingering upset to supply chains following the Covid pandemic means providers will likely have had enough of disruption. Stable, reliable old hands will be held in the highest regard in 2023.
